Crude oil prices in the U.S. continued to show strength this week while demand for petroleum products remains strong and crude oil inventories continue to slide.
The Organization of Petroleum Exporting Countries (OPEC) and its non-member countries, which includes Russia, said it will increase oil production beginning in August.
Crude oil prices for West Texas Intermediate traded on the New York Mercantile Exchange increased 3% to $75 during trading on Thursday, July 1. Trading on the international exchange for Brent crude approached $80 per barrel.
Analysts expect oil demand to gather pace in the second half of the year as more people are vaccinated against COVID-19 and travel restrictions are eased, Reuters reported.
In the United States, crude stockpiles fell last week for the sixth straight week, and crude inventories at Cushing, Oklahoma, the delivery point for WTI, dropped to their lowest since March 2020.
The Energy Information Administration reports a decline of 5 million barrels of oil inventories this week to 479 million barrels, which is a decline of 53 million barrels from a year ago.
U.S. oil production remains flat at 11 million barrels per day.
The drilling rig count in the U.S. is 470 compared to 265 a year ago.
In other news, European Union countries approved a law this week setting more aggressive limits on greenhouse gas emissions (GHG).
The new law establishes a goal of reducing net EU emissions by 55% by 2030, from 1990 levels, and eliminating GHG by 2050.
In order to achieve these new standards, which is an increase from a 40% reduction in GHG by 2030, the 27 countries of the EU will be challenged to implement changes in energy usage by industry, homes, transportation, etc.
Energy consumption in Europe in 2019 consisted primarily of oil (37%) and natural gas (21%). Renewables account for 11% of energy usage in 2019, according to the EU.
Alex Mills is the former President of the Texas Alliance of Energy Producers.
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